Tag Archives: lev

Note to Greece: “Those Who Do Not Learn History Are Doomed to Repeat It”

Bulgarian lev gains currency in Greece as euro exit looms,” said the Financial Times on July 9. Nearly 20 years ago, the idea that the lev was even good for the Bulgarians was laughable. Then Greek products and companies were flooding Bulgaria and it was Bulgarian banks that were failing. Now it seems that it is the Bulgarians who have something to say about Greece’s stewardship of its economy and the need for financial discipline. The extreme turnabout brings back memories of living in Bulgaria during its financial crisis in the mid-1990s.


In June 1995, my husband and I moved to Sofia for a two-year stint. The exchange rate was 66 Bulgarian leva to one U.S. dollar. We settled ourselves in my mother-in-law’s living room and oriented ourselves in our new jobs. I began my personal quest to learn Bulgarian. I started a habit of reading whatever signs I passed. Unfortunately it was too late to see the sign that my husband had loved as a symbol of the unintended, the black humor present in communist societies. A classic example of communist black humor: Man shouts, “Brezhnev is an idiot!” He gets sentenced to 15 years, five years for insulting the Soviet leader and 10 years for betraying a state secret. The sign my husband saw for many years in Sofia was on the front of the psychiatric hospital and it read: “Our Purpose Is Communism.” By 1995, there was a satirical show on national television full of such black humor and at the end of two years, I was laughing too.

We were disappointed that the Bulgarian Socialist Party (the Bulgarian Communist Party with a name change) was in power. On the other hand, we were willing to be hopeful about its 36-year old leader, the new Prime Minister Jan Videnov. Videnov was no rebel. He joined the Bulgarian Communist Party at age 24, after having graduated first from the English high school in Plovdiv, Bulgaria, and then from the elite Moscow State Institute of International Relations where he added Arabic to his facility in Bulgarian, Russian, and English. Not a rebel, not a democrat, but possibly, it was hoped, at least a pragmatic and effective technocrat.

We made an offer for a tiny studio apartment. We were ready to pay the leva promised, when seller and buyer together were faced with the reality of Act 16. It turned out that the seller had not yet obtained Act 16, a certificate from the municipality that would attest that the property was the seller’s to sell, that the property had project approval, and that it was indeed to be used as a residence as promised. We could not finalize the sale without this precious document and it took many months of the poor seller making fruitless trips to the municipal office before we hired a lawyer. The lawyer went to the municipal office and said “What do you want to put your stamp on the certificate?” The answer was “Perfume.” The lawyer took one bottle of Bulgarian perfume and one bottle of French perfume, returning from his mission with the stamped Act 16 certificate. Unfortunately for the poor seller, nearly one year had gone by. The lev was worth less than half what it was when we signed the contract. We felt so bad that we voluntarily paid considerably more leva in the end though we still sacrificed many less dollars.

That perfume caper is an example of the low-level corruption seen with depressing frequency and sameness in so many countries, but corruption in Bulgaria managed to infiltrate every level of society. Bulgarians were already cynical about their their institutions and even about their fellow citizens, but it was a cynicism that could never quite keep up with the reality. The mafia then was so blatent and omnipresent that it inspired a peculiar form of patriotism. Waiting at a Druzhba busstop one morning, I heard one pensioner say almost boastingly to his friend, “Our mafia is worse than the Italian mafia.”

Jan Videnov

Jan Videnov quickly proved that he was in no way an effective technocrat. By 1996, there was no bread. For Bulgarians, a meal is not a meal without bread. No one would think of wasting even the smallest heel of a loaf because “it’s a sin to throw away bread.” Now the sin was the government’s mismanagement of the wheat crop. Predictably after bread disappeared from the market, it became nearly impossible to find flour to make bread at home. I went from store to store and from market to market, and when I saw flour at the Rimska Stena (Roman Wall, and yes, there is one) market, I discovered my inner hoarder and bought four one-kilogram packages. The Associated Press noted on May 15, 1996: “In the latest sign of a deepening economic crisis, a flour shortage has forced hundreds of bakeries across Bulgaria to close this week.” The AP added “The Socialist government of Premier Zhan [sic] Videnov is grappling with the most severe economic crisis since the end of Communist rule six years ago.”

Yes, Jan Videnov was grappling and his cadre of Communists-cum-Socialists was grasping. The new Privatization Agency was painfully slow in its work, but rumor muttered that it was crackerjack in its ability to channel ownership to the usual suspects. No one had any faith that the shares offered to the average citizen would be worth anything. The Communist Elite were now the Socialist Elite. The grain reserve was half empty; rumor also had it that grain had been sold on the foreign market to the benefit of the usual suspects. Then slow reform plus little to no regulation of the banking sector made us forget about what we put in our mouths and focused us on what we had put in the bank. Which was no longer there. We received pennies on the dollar as did Bulgarians all over the country. Many people seemed to be reading Zakonut na Murfi (Murphy’s Law) on the bus.

Законът на МърфиЗаконът на Мърфи в Ефир

By January, Videnov and his government had achieved a noticeably high level of inflation. The burning question everywhere was whether we were now experiencing hyperinflation. People talked about it obsessively. We stuffed our salaries of stacks of leva in bags, bought as much food as we needed for the next few days, and immediately exchanged the rest for dollars. Shelves in grocery stores started emptying and no one could say when they would be restocked. The little produce on hand was limp and unappetizing. When I asked when oatmeal would be available, I was told, “the oatmeal factory closed.” When my mother-in-law had to buy a new refrigerator, the prices on all the appliances were in German marks with a handwritten sign indicating the exchange rate of the hour. By January 1997, the lev was 3000 to the U.S. dollar, inflation was 300%, and the nation was as one in considering this hyper—just two months later inflation had passed 2000% according to the IMF’s quarterly Finance & Development.

The nation was also as one in considering that Jan Videnov and his compatriots had to go. Strikes ensued. Demonstrations broke out. We went out too, day after day, as Rumen joyously shouted along, “Cherveni Boklootzi” (“Red Trash”). The crowds were enormous, massing in front of the Alexander Nevsky Cathedral, and were mostly peaceful. But one day, as we walked across the park to join the demonstrators, we saw riot police running and we began to run too. Angry demonstrators were storming the National Assembly, throwing rocks at the building and smashing the cars of Jan Videnov’s Socialist legislators while their owners cowered inside. It was frightening, but not more frightening than experiencing the country’s economic collapse. On February 11, the Bulgarian Socialist Party agreed to hold early parliamentary elections on April 19 and a caretaker government was put in place.

It has not always been smooth sailing, Bulgaria is still labeled as the poorest country in Europe, and the life is a struggle for too many. But the Currency Board that stabilized the lev in July 1997 has remained strong, debt is the fourth lowest in Europe, and Bulgaria’s politicians have held the financial austerity line. It’s a shame that Greece a short drive or train ride to the south has taken no lesson from Bulgaria’s experience, but despite that “Bulgaria Ready to Help With Greek Humanitarian Aid, PM Says.”